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RFA asks EPA to reconsider 2014 RFS blending levels

The Renewable Fuels Association (RFA) submitted comments to the Environmental Protection Agency (EPA) urging the Agency to reverse its proposal to lower the 2014 Renewable Fuel Standard (RFS) Renewable Volume Obligations (RVOs). EPA has proposed to reduce the RFS from the statutory volume of 18.15 billion gallons (BG) to just 15.21 BG. As part of the cut, EPA is proposing to lower the requirement for renewable fuel (the portion of the RFS for which corn starch ethanol qualifies) from 14.4 BG to 13.01 BG.

In the detailed comments submitted to EPA Administrator Gina McCarthy, RFA President and CEO Bob Dinneen expressed that “RFA is strongly opposed to the proposal to reduce the 2014 RVO for renewable fuel from the statutory level of 14.4 billion gallons to 13.01 billion gallons. We encourage EPA to reconsider its proposal and finalize the 2014 requirement for renewable fuel at 14.4 billion gallons—the level set by Congress.”

Dinneen addressed the impact of the EPA’s proposal on the Renewable Identification Number (RIN) program, explaining, “Had the Agency proposed keeping in place the RVO for renewable fuel at the statutory level of 14.4 billion gallons, the RFS program’s Renewable Identification Number (RIN) market mechanism would have continued to function exactly as intended to ensure that required volumes of renewable fuels are produced and consumed. But by proposing an RVO for renewable fuel that is below the ‘blend wall,’ the proposed rule completely eviscerates the RIN market. In this way, the most significant factor contributing to the so-called ‘blend wall’ in 2014 is EPA’s proposal itself. The baffling approach to establishing annual RVOs set forth by EPA results in a circuitous, self-fulfilling prophecy that ultimately defeats the purpose of the RFS.”

He continued, “Plainly, this is a backward approach to complying with the RFS that belies Congress’s intent. Restoring the efficacy of the RIN mechanism by setting the RVO at 14.4 billion gallons would break this vicious circle and ensure the goals of the RFS are met.”

Dinneen also addressed the EPA’s lack of legal authority to use the so-called “blend wall” as a determinant for setting the RVO for renewable fuel, noting, “The Clean Air Act does not permit the Agency to take into account ‘factors that affect consumption’ in determining whether to grant a general waiver based on an ‘inadequate domestic supply’ of renewable fuel. Instead, EPA may grant a waiver based on an ‘inadequate domestic supply’ of ‘renewable fuel’ only where it finds that the renewable fuel industry lacks the capability to produce the required volumes of renewable fuel, and where there are insufficient carryover RINs available for obligated parties to meet the statutory RVO. The Agency has not made that showing here.”

Dinneen concluded, “In the end, the RFS program was designed to force the oil industry to change the status quo—not to perpetuate it. The entire purpose of this program would be subverted if the oil industry is rewarded for its failure to take the steps necessary to ensure that it was capable of distributing, blending, and dispensing the renewable fuel volumes required under the statute.”